Terms of Trade

this is the money earned from exports against the price ofimports

if a country is reliant on exporting raw materials e.g. food crops or cereals then they have declining terms of trade

this means they have to sellmore of the resource, leaving food supplies short in that country and therefore increasing the price of that good for local people. Often people earn less and living standards decrease and poverty increases

very vulnerable to changes in the global market

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Why do MDCs/NICs have continuous improving ToT?

legacy of MDCs e.g. British Empire, Japan and USA dominating

LDCs willing to allow it to happen; better than selling nothing

exploitation, blackmail, not many options

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Changes in Global Trade

traditionally North-South trade flows have seen developing countries exporting primary products (minerals) but in the last 20 years they have moved to manufacturing

80%of their export are now manufactured goods with growing % of service exports too

trade is still often very unequal despite these countries exporting more expensive goods

trade surplus = Exports > Imports

trade deficit = Imports > Exports - can leadto the 'debt trap'

globalisation has had a massive impact e.g. China, India,Mexico, Brazil all exporting more, but some have not benefitted e.g. sub saharan Africa

trade doesn't always reduce inequalities within a country e.g. Vietnam and China who have an internally increasing gap in wealth between the rich and poor